Complementarities and Substitutabilities in Franchise Contracting: Some Results from the German Franchise Sector

摘要

According to the property rights approach, decision rights have to be allocated according to the distribution of intangible knowledge assets between the franchisor and franchisee and ownership rights have to be assigned according to the residual rights of control (residual decision rights). Since residual income rights are diluted in franchising relationships, ownership rights include not only residual income rights (initial fees and royalties) but also complementary ownership surrogates to simulate the motivation effect of undiluted ownership rights. Therefore, under a property rights perspective, an efficient contract structure in franchise relationships implies co-location between knowledge assets and decision rights and complementarity between residual decision and ownership rights. The more important the franchisor's (franchisee's) system-specific assets (local market knowhow) for the generation of residual surplus, the more decision and complementary ownership rights should be transferred to the franchisor (franchisee). Three hypotheses were derived from the property rights approach and tested in the German franchise sector. The empirical results are partly supportive of the hypotheses.